OREANDA-NEWS. More-->S&P Global Ratings revised its outlook to negative from stable and affirmed its 'A-' long-term rating and underlying rating (SPUR) on Winston-Salem State University (WSSU or the university), N. C.'s existing general revenue bonds. At the same time, S&P Global Ratings assigned its 'BBB' long-term rating and stable outlook to the Board of Governors of the University of North Carolina's series 2016 refunding limited-obligation bonds issued for the university, and affirmed its 'BBB' long-term rating and SPUR, with a stable outlook, on WSSU's outstanding limited-obligation bonds.

Securing these limited-obligation bonds are semiannual base rentals pursuant to a lease between the state of North Carolina and the WSSU Student Housing Foundation LLC. The bonds are payable solely from net project revenues (consisting of three newer residence halls) and dormitory system revenues after payment of WSSU's general revenue debt, including any general revenue debt issued in the future, which can be issued without limit. These bonds are notched from the rating on the university's unlimited student fee (USF) bond rating, given the more narrow revenue pledge and lease structure..

"The negative outlook on the USF bond rating primarily reflects the implementation of our revised higher education criteria, published Jan. 6, 2016, as well as our opinion of the university's significant increase in borrowing during the past few years that has caused dilution in financial resources compared to debt," said S&P Global Ratings credit analyst Jessica Wood.

WSSU plans to issue about $20 million in debt, which would increase its total long-term debt to approximately $100 million during calendar 2016. The additional debt will exert greater pressure on financial resources that we already view as very weak for the rating. We have factored this expected additional $20 million into the pro forma debt figures.

We have assessed the university's enterprise profile as strong, characterized by solid selectivity, improving retention rate, a growing freshman class, and an experienced senior management team supported by the University of North Carolina system. We have assessed the university's financial profile as adequate, based on improving full-accrual operations, WSSU's substantial budgetary support from state appropriations (which accounted for 44% of fiscal 2015 operating revenues), significant leverage, and extremely weak financial resources